RBI wants to ban cryptos, but India needs global support to make that happen: Finance Minister Sitharaman

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• Jul 18, 2022 | Kabir Chakraborty

Sitharaman continued that due to the global reach of cryptocurrencies, international cooperation was required to prevent any kind of regulatory arbitrage.

Digital Desk: The Reserve Bank of
India (RBI) has advised the government to enact laws and bans regarding
cryptocurrencies.

Finance
Minister Nirmala Sitharaman stated in Parliament on July 18 that the government
appears to be of the opinion that "global collaboration" is required
for any successful regulation or ban.

The
RBI has advised the creation of legislation for this industry in light of its
worries about the destabilising impact of cryptocurrencies on a nation's monetary
and fiscal stability.

The
finance minister wrote, "The RBI is of the opinion that cryptocurrencies
should be prohibited in response to a question in the Lok Sabha."

Sitharaman
continued that due to the global reach of cryptocurrencies, international cooperation
was required to prevent any kind of regulatory arbitrage.

"Any
legislation for regulation or for banning may only be effective after major
worldwide collaboration on appraisal of the risks and benefits and the
establishment of common taxonomy and criteria," she said.

Sitharaman's
comments are especially noteworthy in light of rumours that the government may
draught legislation to regulate the cryptocurrency industry during the current
monsoon session of Parliament. But no introduction date for such legislation
has been set.

Even
before the aforementioned bill is introduced, all eyes are on the government's
draught consultation document on cryptocurrency. The paper, which is
anticipated to clarify the government's position on cryptocurrencies, was said
to be "nearly finished" in late May. However, it is still in the
works.

The
classification of cryptocurrencies- whether they should be considered financial
assets or commodities- is also up for debate, but the government has so far
refused to publicly state where it stands on the issue. On the other hand,
Prime Minister Narendra Modi and Sitharaman have argued for concerted
international action to address the problems brought on by the use of
cryptocurrencies in recent months.

While
cryptocurrency legislation is still pending, the RBI has continued to develop
its own digital currency, which it hopes to introduce this year. The
development of private cryptocurrencies may "die" as a result of the
Central Bank Digital Currencies (CBDC), according to RBI Deputy Governor T Rabi
Sankar.